Sysco 2014 Annual Report Download - page 94

SYSCO CORPORATION-Form10-K82
PARTII
ITEM8Financial Statements and Supplementary Data
The income tax provision for each  scal year consists of the following:
(Inthousands) 2014 2013 2012
U.S. federal income taxes $ 433,795 $ 439,667 $ 540,861
State and local income taxes 55,736 69,759 77,064
Foreign income taxes 54,560 45,602 44,492
TOTAL $ 544,091 $ 555,028 $ 662,417
The current and deferred components of the income tax provisions for each  scal year are as follows:
(Inthousands) 2014 2013 2012
Current $ 574,760 $ 582,889 $ 840,745
Deferred (30,669) (27,861) (178,328)
TOTAL $ 544,091 $ 555,028 $ 662,417
The deferred tax provisions result from the effects of net changes during the year in deferred tax assets and liabilities arising from temporary differences
between the carrying amounts of assets and liabilities for  nancial reporting purposes and the amounts used for income tax purposes.
Deferred Tax Assets and Liabilities
Signi cant components of Sysco’s deferred tax assets and liabilities are as follows:
(Inthousands) June28,2014 June29,2013
Deferred tax liabilities:
Excess tax depreciation and basis differences of assets $ 416,417 $ 455,752
Goodwill and intangible assets 211,434 208,229
Other 15,171 18,127
Total deferred tax liabilities 643,022 682,108
Deferred tax assets:
Net operating tax loss carryforwards 20,123 19,149
Bene t on unrecognized tax bene ts 22,170 23,833
Pension 287,046 224,990
Share-based compensation 41,262 39,316
Deferred compensation 33,280 34,951
Self-insured liabilities 65,002 47,538
Receivables 47,688 48,236
Inventory 62,799 63,509
Cash  ow hedge 56,826 5,815
Other 26,471 44,760
Total deferred tax assets 662,667 552,097
TOTAL NET DEFERRED TAX (ASSETS) LIABILITIES $ (19,645) $ 130,011
The company’s net operating tax loss carryforwards as of June 28, 2014 and June 29, 2013 consisted primarily of state net operating tax loss carryforwards.
The state net operating tax loss carryforwards outstanding as of June 28, 2014 expire in  scal years 2017 through 2033. There were no valuation allowances
recorded for the state tax loss carryforwards as of June 28, 2014 and June 29, 2013 because management believes it is more likely than not that these
bene ts will be realized based on utilization forecasts.
Effective Tax Rates
Reconciliations of the statutory federal income tax rate to the effective income tax rates for each  scal year are as follows:
2014 2013 2012
U.S. statutory federal income tax rate 35.00% 35.00% 35.00%
State and local income taxes, net of any applicable federal income tax bene t 2.82 2.59 2.65
Foreign income taxes (1.66) (1.22) (1.07)
Other 0.71 (0.50) 0.55
36.87% 35.87% 37.13%
The effective tax rate of 36.87% for  scal 2014 was negatively impacted primarily by two items. First, the company recorded tax expense of $6.2 million
related to a non-deductible penalty that the company incurred. Second, the company recorded net tax expense of $5.2 million for tax and interest related
to various federal, foreign and state uncertain tax positions. This negative impact was partially offset by the recording of $5.7 million of tax bene t related to
disqualifying dispositions of Sysco stock pursuant to share-based compensation arrangements. Inde nitely reinvested earnings taxed at foreign statutory
rates less than our domestic tax rate also had the impact of reducing the effective tax rate.